SAN JOSE, Calif. – Using technology from top Silicon Valley companies such as Cisco and Intel, advertisers are creating a new breed of digital signs that can be customized depending on a viewer’s age and gender.

Already starting to appear in selected malls and other spots around the country, the signs have the potential to revolutionize the retailing industry, but their intrusiveness has led to criticism from privacy advocates and nervousness from some in the marketing industry itself.

“The vast majority of people walking in stores, near elevators and in other public and private spaces have no idea that the innocent-looking flat screen TVs playing videos may be capturing their images and then dissecting and analyzing them for marketing purposes,” the non-profit, Southern California-based World Privacy Forum warned in a report it issued on digital signs in January. “Controls need to be put in place now, before this technology runs amok.”

Businesses insist the signs are good for them and for consumers, because they can offer more focused and effective advertising. And the burgeoning market has caught the eye of Silicon Valley companies. Among them is San Jose-based Cisco, which makes gear that displays images and management software for the signs. It’s not a huge business yet for the company, according to Thomas Wyatt, general manager of Cisco’s digital media systems unit. But he said it’s growing, adding “these are really emerging technologies.”

The trend stems from a desire among marketers to make ads more effective by making them more relevant to those seeing them.

“If you come by a sign and it’s playing something you’re not interested in, it’s noise to you,” said Joe Jensen, a manager at Santa Clara, Calif.-based Intel, which touts the ability of its chips to provide visually appealing ad images and to process the audience data the signs capture. But if the message is tailored to a specific individual’s needs, he added, the person often will welcome the information.

Using facial-recognition software from other companies – such as TruMedia of Tampa, Fla. – the signs can recognize the demographic characteristics of people standing in front of them and instantly change their ads.

Tony Leger, a TruMedia sales director, said hundreds of signs with that capability are in operation worldwide in retail malls, airports, banks and other places. But he said it’s unclear how many are automatically adjusting their ads for customers because many businesses that have installed them don’t want to reveal that to competitors.

Some of the signs have proved controversial, including digital billboards Castrol operated in London in September. Equipped with cameras, the signs read the license plates of each passing motorist, accessed a database that revealed the automobile’s model and year, and flashed the driver a message about what type of oil their vehicle should use.

The ads were blasted as intrusive and a potentially unsafe distraction, and Castrol halted them after only a few days.

The digital devices are beginning to resemble the brainy signs featured in the 2002 science-fiction movie Minority Report, which could recognize people and hail them by name. Many can gauge the sex and approximate age of those standing in front them. That way, if a pre-teen girl watching the screen wanders away and an adult male approaches, the sign automatically can switch from showing an ad for Hello-Kitty Dress-Me Bears, for example, to one for men’s work boots. Samsung claims its versions can even determine the race and nationality of a viewer.

These digital signs are part of a growing push to personalize ads through technology.

Web ads that are customized based on a user’s interests and demographics have been a staple for companies like Google and Yahoo for years. Although critics have decried the tactic, Forrester Consulting found 77 per cent of the marketers it surveyed in January “are planning to use or already use audience targeting for their online strategy.”

More recently, companies have used GPS technology in mobile phones to tailor ads to a user’s location (“25% off lattes” as someone walks by a coffee shop, for instance). Although many retailers won’t send such ads unless invited to do so by a consumer, the practice worries the Center for Digital Democracy. In a letter to the federal government on Monday, the non-profit public interest organization warned against letting the practice proliferate “without strong privacy and consumer health-related safeguards in place.”

Any ad targeting makes some people uncomfortable. A survey of 1,000 adults last year by University of California-Berkeley and University of Pennsylvania researchers found that 66 per cent opposed such pitches.

Count Will Douglas among them. The 25-year-old consultant from Oakland, Calif., who was shopping at the Milpitas Great Mall, termed the idea “weird” and wondered if the equipment might make insulting errors about “someone of ambiguous gender” or mistake a short person for a child. Assuming a sign “can tell something about you strikes me as arrogant,” he said.

“That’s so wrong,” added state agricultural technician Bobbi Thornton, 55, of Milpitas, who was at the same mall searching for a handbag. “This is like the Internet search engines that follow your shopping behavior. It’s so invasive.”

Face-assessing digital displays even make some advertisers skittish. Last month, Point of Purchase Advertising International published guidelines for using the signs, advising among other things that consumers always be told when they are under surveillance. Despite the advantages of such technology, the industry group concluded, being able to monitor a consumer’s every move and facial feature “sends shivers down the spine of even the boldest marketer.”

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